Articles about Hungary
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2 years ago
Trade and store crypto
Can I trade Bitcoin and cryptocurrency in Hungary?
Introduction to Bitcoin and cryptocurrency trading in Hungary
We have previously written that Hungary is something of a dark horse in the crypto world with a higher-than-expected crypto ranking in part to a positive government outlook towards crypto generally and high numbers of Bitcoin ATMs and Bitcoin nodes throughout the country.
In line with new definitions of crypto from the EC, Hungary has stepped in to treat crypto gains differently from standard income. From 2022 gains from crypto transactions are to be treated as separately taxed income in Hungary. This clears up a lot of complexity for taxpayers who do want to trade crypto and pay their taxes on income from crypto. As we have noted, clearer guidance – even on tax – adds a degree of confidence to the crypto economy and brings it more into the mainstream (and there’s nothing more mainstream than paying tax)
Hungary moves up the rankings thanks to solid scores on Google search, plus high numbers of Bitcoin nodes and ATMs as well as its government taking action on taxes rather than the usual ‘wait and see’ approach of many countries.
Hungary has plenty of crypto owners relative to its population size, and there is a keenness for crypto spending and investing. The government is planning tax reductions to increase compliance with tax policy.
Bitcoin tax in Hungary
Legal – existing crypto legislation
Cryptocurrency, for a long time seen as risky by the Hungarian government, has now become much more acceptable. Measures to streamline the tax system, including tax cuts on crypto trading, are expected to increase tax revenues overall. You could say it’s become a very attractive place to deal in crypto.
Legal – forthcoming crypto legislation
Possible tax reduction measures on crypto purchasing and gains are still in the proposal stage and if approved by the Hungarian parliament will take effect in 2022 – so watch this space.
Crypto tax in Hungary
Income tax Hungary
The EC-initiated Markets in Crypto Assets regulation, or MICA, defines crypto-assets as digital representations of value or rights, which may be transferred and stored electronically, using distributed ledger technology (DLT) or similar technology. This is the definition Hungary will use and it is subject to a15.5%social contribution tax besides the15%personal income tax. Theoverall taxburden rises to26.5%if the individual pays their taxes from the gains and they don’t come through from a Hungarian financial enterprise.
Tax relief
No taxis due on the exchange of a crypto asset for another crypto asset, or from mining crypto assets – only when the asset in question is sold. There’s no tax either if the revenue from the total of the crypto transactions is under10%of the yearly minimum wage in Hungary. One additional condition is that no revenue should be generated from other identical transactions on the given date and that the sum of these smaller revenues should not exceed the minimum wage in the fiscal year.
Tax when moving residency
If you are a long-term resident of Hungary you have probably been deemed a permanent resident for tax purposes. If you are not a permanent resident, and your holdings are outside of Hungary you’ll fall under the required tax laws of your adopted country.
Tax on mining
Hungary is currently undergoing a review of its tax policy on crypto dealing with the prospect of a 50% reduction and the tax on mining may change after this long-term review. At present, mining for coins is acceptable and taxable and your costs of doing it are tax deductible.
Bitcoin financial services in Hungary
Fin services – retirement planning
Most retirement and pension funds worldwide deem cryptocurrencies to be too volatile to become part of long-term retirement schemes. There is little certainty on this at present.
Fin services – banking
Crypto and digital currencies are openly debated and widely understood right from the top down. Like most countries, there is no bank or financial organization that would consider cryptocurrencies as regular currency, but Hungary is looking into the advantages of blockchain technology overall. With no specific policy toward crypto, Hungary follows EU regulations. In Hungary, the EU regulation mainly applies to companies that deal with the deposit of cryptocurrencies and the exchange of cryptocurrencies (cryptocurrency exchange).
Fin Services – Defi
Hungary’s banking and insurance sector recognizes how FinTech businesses can attract a significant number of customers, and has started developing innovative solutions as well as forming various types of partnerships with companies in this field.
Using crypto in Hungary
Spend
Hungary is possibly overlooked as a crypto leader, and spending all that crypto is a lot easier than you might think. Bitcoin ATMs are springing up all over the country and you can exchange your bitcoin for fiat or spend them directly in a wide number of places including hotels, jewelers, bars, and cafes – you can even get some taxis to take you for a ride.
Gifting crypto
If you’re feeling generous you can gift your crypto but you’ll still have to pay tax on any gains you have made prior to gifting them, whether you’re giving them to a friend, relative, or an officially recognized body with charitable status.
Crypto regulation in Hungary
Security
Cryptocurrencies in Hungary are not heavily regulated as yet, and there is no regulated market environment or designated authority to control the taxation of income from them. As always, it pays to do some research into exchanges and find out how much support and protection they offer. In all cases you need to have a clear record of your dealings. Overseas exchanges may provide a wider choice of services and currencies to choose from. Home-based securities may be able to provide more customer support – but you need to check.
Transparency
As with many government bodies, Hungary needs to know about all your crypto dealing for tax purposes. The authorities can request information from crypto exchanges and get it. You’ll also have to disclose ID and details when opening an account with any exchange. Make sure you keep records of your dealing as either a casual or professional dealer.
Positive Regulation 1
Negative Regulation 0
Institutional Outlook 3
Financial Services
Crypto Facilitation - Banks 1
Crypto Services - VASPS 1
Crypto Pensions / Investment Industry 1
Business Community and Enterprise Funding 2
